SEC Says Adios To Hedge Fund Registration Rule

Aug 11 2006 | 12:00am ET

The Securities and Exchange Commission is waving the white flag in its battle to save the controversial hedge fund registration requirement. This week, SEC Chairman Christopher Cox announced the agency would not appeal a June 23 court decision that vacated the rule, calling it “arbitrary.” But Cox warned that hedge funds are not off the hook yet when it comes to SEC scrutiny.

“Since the appellate court’s decision was based on multiple grounds and was unanimous, further appeal would be futile and would simply delay and distract from our goal of advancing investor protection,” Cox said in a statement. But he went on to say, “Notwithstanding the Goldstein decision, it is important to point out that hedge funds today remain subject to SEC regulations and enforcement under the antifraud, civil liability and other provisions of the federal securities laws.”

Cox said that the SEC’s new tack would be similar to the one he laid out on July 25 before the Senate Banking Committee. “The Commission is moving aggressively on an agenda of rulemaking and staff guidance—some of which may be issued as early as this week,” he said. That includes a new anti-fraud rule addressing a “side-effect” under the court decision, which made current antifraud rules applicable only to clients, and not investors, of hedge funds. The new rule will “look through” a hedge fund to its investors.

In addition, the SEC is considering a redefinition of “qualified investor” that would raise the minimum asset and income requirements for investing in hedge funds. Cox also said staff guidance would address grandfathering and “other miscellaneous relief necessitated by the vacating of the rule.” And though the registration requirement is dead, Cox said the SEC would encourage funds already registered to remain so. The Commission will try to “eliminate disincentives for voluntary registration, and enable hedge fund advisers who are already registered under the rule to remain registered,” he said. 


In Depth

Q&A: Pantheon’s McCrary Says Private Equity Market ‘Robust’

Dec 17 2014 | 8:32am ET

Dennis McCrary is a partner at Pantheon, a private equity firm with $32.2 billion...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.